Council asks hard questions about KeyArena remodel, transportation

Transportation will be a key sticking point in negotiations over a renovated KeyArena at Seattle Center, based on questioning from Seattle City council members on Monday.

Council members Lorena Gonzalez and Rob Johnson raised serious concerns about transportation, during the 90 minute hearing, the first council review of the proposed renovation.

Last month, Mayor Ed Murray selected the Oak View Group, led by Tim Leiweke, as the preferred partner for a more than half-billion dollar rebuild of the arena on the Seattle Center campus.

Seattle Economic Development Director Brian Surratt laid out the vision for the next steps, before the council, including how the city has hired consultants, and hopes to strike a negotiated deal by Sept. 14. But, his comments about transportation raised eyebrows, from Gonzalez and Johnson in particular.

“You used the phrase 'it will take time',” Gonzalez said to Surratt. “Can you explain what it will mean it will take time?” Gonzalez hinted that it was the issue that she gets asked about most when it comes to KeyArena.

“A fully baked transportation management plan, we should not expect to see that in the (Memorandum of Understanding),” Surratt answered. “I think what you can expect to see is a level of commitment from OVG and the city to develop a process to develop that fully baked transportation management plan.”

He added, “A project as complicated as this, we're not going to come up with a laundry list of projects to fund in the next two months a put a price tag on those items.”

But Johnson seemed to think there should be a price tag, if OVG is to move forward on the project. “At very minimum a dollar figure commitment from the private sector,” he said.

Council member Debora Juarez, who is co-chairing the Select Committee on Civic Arenas, suggested the negotiations would be a collaborative effort, and done with input of the council and mayor’s office, unlike the negotiations over the SoDo arena in 2012.

That deal was negotiated by then-mayor Mike McGinn, who is now running for his old seat. He held a press conference before the council committee saying it should still “move quickly on granting a street vacation for the SoDo arena” and that he's "proud of the deal we made.” He also said he had a series of concerns about the OVG plan.

There was a smattering of public comment during the hearing, including from the Port of Seattle. The port’s Government Relations Director Pearse Edwards testified that “we support the redevelopment of KeyArena” and “we believe the use of existing city facilities such as the KeyArena is the first option.” The port was a stanch opponent of the SoDo arena proposal.

Members of Pottery Northwest, which occupy the Bressi Garage, in the corner of the redevelopment zone, suggested the “Future of (Pottery Northwest) is at risk” if a new arena is constructed. The garage has been nominated for historic preservation, with a designation vote scheduled for next month. The Council Civic Arenas committee is expected to meet again on Aug. 7. The mayor’s office and council have suggested, in an outline, a finalized deal can be struck before the end of 2017. Surratt said Monday, he doesn’t believe a new arena would open until the end of 2020, or late 2021.

In an unrelated development, the University of Washington’s Evans School of Public Policy and Governance released a public financial analysis of the KeyArena and SoDo arena proposals.

It reads, in part, “On May 19, 2017 the SODO group hired Justin Marlowe, a professor of public finance at the University of Washington, to analyze the public finance dimensions of both proposals. Dr. Marlowe performed that analysis with the assistance of three Master of Public Administration students at the University of Washington: Grant Dailey, Angela Pietschmann, and Alex Schoemann. Ms. Pietschmann and Mr. Schoemann are Certified Public Accountants. This report outlines our methodology and main findings.

This analysis has two objectives. First is to highlight the public finance implications of both proposals. Specifically, we focused on the City tax revenues each proposal would likely generate, and where those revenues would flow.”

The UW study reads that the analysis uses more than 100 unique assumptions that drive estimated tax collections, including ticket prices, concession sales, tax rates, parking patterns, and many other factors.

The UW researchers concluded:

“SODO’s estimated contribution to the City General Fund is three times OVG’s. The SODO arena would send an estimated $103 million (inflation- adjusted) of new tax revenues to the City General Fund over 35 years. Under the same base case assumptions OVG would generate just under $34 million. These estimates are also consistent across different scenarios. For example, under an “aggressive” set of assumptions SODO would send just short of $111 million to the General Fund, where OVG would send just short of $47 million.”

And:

“Both plans redirect roughly the same amount of tax revenue. In the base case scenario, the SODO plan redirects approximately $205 million of City admissions tax. The City admissions tax has historically financed the public’s share of capital investments in publicly-owned Seattle sports and entertainment facilities. The SODO group’s position is that collecting that tax on a privately- owned facility puts team owners at a competitive disadvantage relative to markets that do not collect that tax. OVG asks the City to redirect to the City Arena Fund approximately $167 of new City retail sales tax, construction sales tax, admissions tax, parking tax, and the leasehold excise tax. If OVG asks the state and county to redirect their respective portions of those same taxes, then under the OVG plan the total taxes redirected exceed $200 million.”

The study also suggested the SoDo plan would also contribute $100 million of property taxes to local governments other than the City of Seattle.

Neither the Oak View Group, nor Office of Economic Development, could immediately be reached for comment on the UW study.